Tags: Bogle | stocks | declines | cycle

Bogle: Stocks Might Drop Up to 50% in Next Decade, But ‘Forget the Noise’

By Dan Weil   |   Tuesday, 02 Apr 2013 08:37 AM

Individuals should invest in stocks for the long term and be prepared for at least two declines of 25 to 30 percent, maybe even 50 percent in the next 10 years, says Vanguard Group founder Jack Bogle.

But he doesn’t view the prospect of such large drops as worrisome. “They come and they go,” he tells CNBC. “The market goes up and the market goes down. It's never failed to recover from one of those 50 percent declines.”

Stocks had large pullbacks in 1973 to 1974, 2000 to 2003 and 2008 to 2009, Bogle notes. “They're kind of scary, often terrifying. But it's typical,” he says.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

“Why it doesn't bother me is if you hang on through the cycle, it's the only way to invest, trying to guess when it's going to go way up or way down is simply not a productive way to put your money to work.”

Investors need to “stay the course,” Bogle explains. “It's like having a lifetime program where you're investing regularly, putting some in stocks and some in bonds.

“The idea is, don't worry about what stocks are doing today, tonight and tomorrow, but look out … a decade. It requires some guts to do this, some character, some courage,” he adds

“Forget the noise. In the long run, the noise is a tale told by an idiot full of sound and fury signifying nothing,” Bogle quips.

Bogle is worried about the Federal Reserve’s massive easing program. “Continuing to have easy money, extremely low interest rates, brings out the worst behavior in speculators,” he states.

David Sterman, senior market analyst at StreetAuthority.com, tells Newsmax TV in an exclusive interview that a stock market correction is almost inevitable this year.

So what makes Wall Street vulnerable?

“This market is rising for the wrong reasons,” Sterman says. “It’s related to short covering; it’s from people taking on too much margin debt; it’s from the Fed’s liquidity, which will eventually run out; it’s from these ultra-low interest rates, which will eventually rise.”

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

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